ATO Is Shining the Spotlight on Work Related Deductions
To claim an expense for your business you need to have incurred that expense in your business and have records of it; the expense needs to relate DIRECTLY to how your business earns its revenue. Expenses that have a partial business and personal use will need to be split in the percentages associated with the use and only the business expense can be claimed. Common work-related expenses that also have personal components are cars, mobiles and internet service for home businesses.
Record Keeping – When You Don’t Have to Keep Records
When claiming work deductions below $300 you are not required to keep records unless it is clothing that is over $150; however beware the ATO can ask you to prove that you DID purchase the items related to the claim. If you haven’t kept records of your purchase and you can’t prove that you purchased it, your claim may be denied.
Do You Have a Home Office?
Did you know that there are different rules that apply when you are working from home?
When your home is the principal location for your business and you have a dedicated office area, you may be able to claim a variety of expenses associated with the amount of area (square meterage) in your home that is used to conduct your business. For your dedicated work area, you may be able to claim expenses that are incurred in the running costs for that portion of your home like a percentage of your electricity bill plus depreciation on your office equipment.
If you don’t have a dedicated work area and use the dining table or the couch to work from, the work-related expense claim you can make are likely to be more limited.
Cryptocurrency is Considered as an Asset for Tax Purposes
The ATO considers cryptocurrency an asset for tax purposes and not a form of currency. Being an asset means that cryptocurrency is therefore subject to capital gains tax. You need to keep records of all of cryptocurrency your trades so that you can determine whether you have made a loss, or a gain relating to each trade and therefore are required to pay tax on any gains.
Capital gains tax can be a complicated area and the ATO will be scrutinising taxpayers that are claiming large cryptocurrency losses.
Do You Earn Income Via the Shared Economy?
If you are earning an income from the shared economy, for example AirBnB or Uber you must declare this income like any other on your tax return. You can also claim business expensed related to the service that you provide.
Are You in The ATO’s Spotlight this Tax Season?
If you are unsure if any of these apply to you or any have other questions related to your tax please contact HBG Tax and Accounting on 08 9594 1963 this week so any arrangements that are needed can be made before the end of the tax year.
This article was written based on information supplied from Knowledge Shop Newsletter June 2019.
The material and contents provided in this article is of informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.